Oil and gas industry news : Three Indian state-controlled oil firms ONGC, Indian Oil Corporation (IOC) and Bharat Petroleum have acquired a 10% stake in consortium in an offshore Abu Dhabi oil field – the Lower Zakum oil field for a price of AED2.2bn ($600m).

ONGC and Bharat Petroleum are represented by their international arms ONGC Videsh, and Bharat PetroResources, respectively in the consortium with IOC for the Lower Zakum oil field in UAE waters.

The ONGC Videsh-led consortium was granted the stake in the offshore Abu Dhabi oil field alongside Abu Dhabi National Oil Company (ADNOC) by Abu Dhabi’s Supreme Petroleum Council (SPC) along the sidelines of the Indian Prime Minister Narendra Modi’s UAE tour.

An agreement signed in this regard is for a term of 40 years, giving ONGC Videsh and its partners an annual oil share of nearly two million metric tons from the Lower Zakum oil field.

ONGC Videsh led consortium bagged a 10% stake in in an offshore Abu Dhabi oil field – the Lower Zakum oil field. Photo courtesy of Abu Dhabi National Oil Company.

The transaction involving the Lower Zakum oil field marks the entry of ONGC Videsh in the UAE. Along with that, it is also the first time ever that Indian oil and gas companies have managed to secure a participating stake in the development of hydrocarbon resources in Abu Dhabi.

Shashi Shanker – Chairman of ONGC Group of companies, commenting on ONGC Videsh’s participation in the Lower Zakum oil field, said: “We are delighted to partner with ADNOC in this important offshore concession. We are hopeful that this historic agreement will lead to further opportunities for Indian oil and gas companies to participate in the UAE’s energy sector.

“The agreement reflects the vision of the Honourable Prime Minister of India towards strengthening hydrocarbon linkages with the UAE on a win-win basis.”

Indian Prime Minister Narendra Modi, commenting on the offshore Abu Dhabi oil field transaction, said: “The offshore concession in favour of the Indian consortium has taken our bilateral engagement in the oil and gas sector to a new level, which befits the comprehensive strategic partnership between our two countries. I am happy to note that we have progressed from a buyer-seller relationship to an era of mutual investments in the oil and gas sector.”

As of now, the Lower Zakum production is about 400,000 barrels of oil per day. By 2025, the Lower Zakum oil field production is anticipated to hit the plateau target of 400,000 barrels of oil per day.

In the past, the Lower Zakum oil field was part of an ex-ADMA-OPCO offshore concession that also included the Umm Shaif and Nasr and Sateh Al Razboot (SARB) and Umm Lulu oil fields.

However, the mega concession has been restructured in a move to maximize commercial value of each of the smaller concessions and also to bring in more partners and provide more market access for the offshore Abu Dhabi oil fields.

ADNOC will keep a 60% stake in the Lower Zakum oil field and will be soon picking potential partners for the remaining 30% stake in the offshore Abu Dhabi oil field.

Commenting on the transaction with ONGC Videsh related to the Lower Zakum oil field Al Jaber – CEO of ADNOC Group said: “Our strategic partnership with ONGC, and the other members of the consortium, marks a new chapter in the strategic and economic relationship between the UAE and India.

“This mutually beneficial partnership will help India meet its growing demand for energy and refined products, create opportunities for ADNOC to increase its market share in a key growth market, and build a solid foundation as ADNOC explores potential international investments, particularly focused on downstream opportunities.”

ADNOC subsidiary – ADNOC Offshore will be operator of the Lower Zakum oil field on behalf of the concession partners.